Question

EB8.

LO 5.4A production department within a company received materials of $7,000 and conversion costs of $5,000 from the prior department. It added material of $78,400 and conversion costs of $47,000. The equivalent units are 5,000 for material and 4,000 for conversion. What is the unit cost for materials and conversion?

Answer 1

The unit cost for materials and conversion is $17.08 and $13 respectively

Step-by-step explanation:

The computation of per unit cost is shown below:

For material:

= (Material cost received + additional material cost) ÷ (equivalent units of material)

= ($7,000 + $78,400) ÷ (5,000 units)

= ($85,400) ÷ (5,000 units)

= $17.08

For conversion:

= (Conversion cost received + additional conversion cost) ÷ (equivalent units of conversion

= ($5,000 + $47,000) ÷ (4,000 units)

= ($52,000) ÷ (4,000 units)

= $13